The Oregonian






























It seems like every month, I’m running into people passing out a slick new business card that announces them as a real estate agent or mortgage broker.

Who wouldn’t want to get a piece of the action? On certain Portland streets, housing prices are doubling in a matter of months. And when there’s this kind of temptation to make quick money, greed can’t be far behind.

Insiders call it land flipping. Silent second. Straw buyers. Foreclosure fraud. Equity skimming. Air loans. If there’s a thought to do it, there’s a scheme attached to it.

"It’s the fastest-growing white collar crime in the country," says California attorney Rachel Dollar, whose Web site, www.mortgagefraudblog.com, helps lenders across the country learn about who’s doing what to whom. "There’s 101,000 schemes. They come up with new ones all the time."

In July, one of Oregon’s most prolific con men, Clifford Brigham — also known as C.J. and Cleveland — and Melodie MacDuffee were indicted on charges that they allegedly defrauded lenders out of $5 million between October 2004 and August 2005. At the time, Brigham was on release from federal prison pending appeal of his 2003 conviction for another scheme.

So, Portland’s latest mortgage fraud allegations — which involve three folks who are well-known in real-estate circles for being financially successful in their craft — are not the most egregious.

Last week, Leanne Booth, 48, a real-estate loan broker; Troy Martin, 40, a real estate sales agent; and Ryan Bonneau, 30, a former mortgage loan originator, were indicted on money laundering and wire fraud charges. They are accused of selling two Marine Drive homes at inflated prices so they could pocket the profits. Between the three of them, they couldn’t have cleared much more than $250,000.

Read more…

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By David Streitfeld, LA Times

Mortgage fraud continues to escalate in Southern California, FBI figures show, raising concerns of increased defaults and foreclosures as the housing market cools down.

Lenders filed 4,228 reports of suspicious activity in the region during the first 11 months of the government’s fiscal year, which ends Saturday, the FBI said. That puts 2006 on track to nearly double last year’s total.

The jump in reports of suspicious activity even as home sales have declined may stem in part from a lag in reporting. But the FBI and industry experts say the trend also reflects growing deceit by average borrowers who overstated their income, exaggerated their assets or hid their debts simply to qualify for a mortgage in the region’s sky-high housing market.

"There’s more of the little guy running around — people committing fraud for housing," said Ronda Heilig, the bureau’s mortgage fraud program manager.

A seven-county region from Orange County to San Luis Obispo County has seen a fourfold increase in suspicious loan activity since 2003, largely coinciding with sharp run-ups in housing prices and lending activity. But with home sales slowing and prices leveling off, the explosion in small-scale duplicity could have serious consequences, industry experts believe.

During the boom, people who lied about their income to get a loan — and then struggled to make the payments — had the option of making ends meet by tapping their newfound equity through refinancing or by selling the property for a profit.

But now, with prices flattening out or declining, those without sufficient equity could be forced to sell for a loss or even default on payments. That could accelerate any downturn in the market by swamping it with foreclosed and bargain-priced properties.

"This is the calm before the storm," said Steve Smith, a Redlands appraiser who lectures frequently about real estate fraud to industry groups.

When home prices in California began to throttle up in the early years of the decade, people needed bigger loans but sometimes couldn’t prove they could handle the debt. To accommodate them, lenders started to offer loans that required little or no documentation.

For example, in a so-called low-doc loan, also known as a stated-income loan, the lender doesn’t verify the borrower’s income. With a "no-doc" mortgage, the lender doesn’t check income, assets or employment.

Such loans, which carry higher interest rates than traditional loans do, were originally designed for people whose income swung widely, like the self-employed, or high-wage earners in unusual circumstances — a doctor who had just moved to a new community and hadn’t set up a practice yet, for instance.

As the state’s boom went on, the mortgages became so popular that they now account for a third of new loans, according to data tracking firm First American LoanPerformance.

Industry insiders have a nickname for low-doc and no-doc mortgages: liar’s loans. The phrase reflects the suspicion that many of the borrowers who get such loans don’t have the income or assets to qualify the old-fashioned way.

One lender recently compared 100 stated-income loans with the borrowers’ tax returns and found that only 10 of the borrowers were telling the truth about their wages, according to Mortgage Asset Research Institute, a division of data firm ChoicePoint Inc.

Sixty of the borrowers had exaggerated their incomes by more than 50%, according to the institute, which didn’t identify the lender.

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Tri-Star Lending Group, a division of Pinnacle Financial, is working with PriceMyLoan to provide direct testing and verification of PML’s automated underwriting and loan pricing engine.

"We have the most accurate automated underwriting and pricing engine in the industry," says Gigi Campbell, National Sales Director at PML. "But investor products change and guideline interpretations are not always clear. By working directly with us, investors such as Tri-Star ensure that their correspondents are providing accurate pricing and approvals using PML."

PIP investors can use the PML engine to input loan scenarios and credit report information. Results generated by PML are checked for guideline and pricing accuracy by the investor. Any discrepancies or changes are communicated directly to PML engineers, where updates are released immediately to every PriceMyLoan client using that investor’s loan products.

"Anything that helps our correspondents grow is good for us," remarks Janet Peters, Vice President of Correspondent Lending at Tri-Star. "PML has proven extremely effective in helping correspondents promote our loan products. Working with PML helps everyone involved by ensuring smooth and efficient underwriting and delivery of loans. We couldn’t be happier."

About PriceMyLoan

PriceMyLoan (pricemyloan.com) is a proprietary product of Insight Lending Solutions (ILS). Founded in 2002, ILS provides web-based application service for the mortgage lending industry and software as a service (SaaS) to its clients to enhance productivity, reduce IT dependency, and accelerate time-to- value for mortgage companies. Combining advanced technology development using XML and MISMO standards with high-quality service, ILS provides its clients with solutions that result in reduced loan cycle times, improved pull through rates, and a lowered total cost of software ownership.

About Tri-Star Lending Group

Tri-Star Lending Group (www.tristarlendinggroup.com) is the wholesale and correspondent lending division of Pinnacle Financial Corporation (www.pinnaclefinancial.com), one of the nation’s fastest growing independently-owned direct mortgage lenders. The company works directly with Wall Street investors to design residential mortgage products that are unique to the industry. Founded in 1988 and headquartered in Orlando, Fla., Pinnacle Financial is licensed in 48 states and employs more than 1,100 people. The company closed more than $5.5 billion in residential mortgage loans in 2005.

Source: PriceMyLoan.com

CONTACT: Jan Thomas of Seroka Public Relations for PriceMyLoan.com,
+1-262-523-3740, or jan@seroka.com

Web site: http://www.pricemyloan.com/
http://www.tristarlendinggroup.com/
http://www.pinnaclefinancial.com/

Company News On-Call: http://www.prnewswire.com/comp/143444.html

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Daniel P. Sussman has been named executive vice president and chief operating officer of People’s Choice Financial Corp., an Irvine, Calif.-based residential mortgage lender organized as a real estate investment trust. Before joining People’s Choice, Mr. Sussman was senior executive vice president at New Century Mortgage Corp., where he formerly held the title of EVP and COO, People’s Choice reported. He previously held senior management posts at EDMC, Western Financial Savings Bank, The CIT Group, and Novus Financial. Mr. Sussman also served as president and chief executive officer of City First Mortgage Corp. People’s Choice also announced the promotion of Brad S. Plantiko to executive vice president of finance and strategic planning. People’s Choice Home Loan Inc., a wholly owned subsidiary of the REIT, can be found on the Web at http://www.pchl.com.